FOR YOUR INFORMATION
We share below a number of recent developments. As always, we rely on FIVS Members to apprise us of noteworthy matters. Please contact the FIVS Secretariat with items that may be of interest.
International Trade
Australia – China: Australia may involve WTO in dispute with China – Australia reportedly may seek to involve the World Trade Organisation in a dispute regarding the anti-dumping tariffs, ranging from 116.2% to 218.4% on Australian wine imports and set to expire in five years, that China announced in March 2021. In December of 2020, China also imposed temporary tariffs of 6.3-6.4%, following a separate probe into wine subsides. Australia’s government and wine sector have denied China’s underlying allegations. Relations became strained following Australia’s call for an international inquiry into China’s handling of the coronavirus pandemic in 2020.
Australia – United Kingdom: Tentative deal would remove tariffs on Scotch and other whisky exports to Australia – Australia and the United Kingdom reportedly may reach an agreement following the G7 summit in Cornwall from 11-13 June 2021 – the first in a series of “next generation trade deals” by the United Kingdom with markets beyond the European Union. The UK’s International Trade Secretary reportedly hopes the agreement will remove the 5% tariff on Scotch and improve protections for whisky in the Australian market. The Australian market is the 8th largest market for Scotch exports, worth £113 million in 2020.
European Union – United States: Doubling tariff on American whiskey postponed – The European Commission has published an implementing regulation to suspend the doubling of its tariff on U.S. whiskey and other goods until 30 November 2021. The EU’s 25% tariff on U.S. whiskey will remain in effect until the EU and the United States agree to suspend or remove the tariff before it automatically escalates to 50% on that date. The implementing regulation follows a joint EU-U.S. statement in May 2021 on steel and aluminum, announcing the start of discussions to address global steel and aluminum excess capacity and the EU’s agreement to temporarily suspend the doubling of its tariffs on American whiskey and other U.S. goods on 1 June 1 2021.
Investment
Indonesia: President prohibits investment in alcohol industry – Indonesia’s president reportedly signed a regulation closing the alcohol beverage industry as a business sector for investment, effective as of 25 May 2021. Presidential Regulation Number 49 of 2021 declares that the business fields closed for investment include “the alcohol beverage industry (KBLI 11010), the beverage industry containing wine alcohol (KBLI 11020), and beverages containing malt (KBLI 11031).”
RTDs
United States – Ready-to-drink products may outrun wine – An IWSR drinks market analysis reportedly indicates that the category of ready-to-drink products (RTDs) rose by 26.4% in the United States during 2020, appealing to consumers in all demographics, and may increase by nearly 27% in 2021. RTD volume is now apparently larger than the total spirits category in the United States, and the report suggests that Americans may soon be consuming more RTDs than wine. Japan is the second largest market for RTDs with a 22% share, followed by Australia, Canada, and China.
Taxation
France: National health institute calls for minimum pricing – A report issued by the National Institute of Health and Medical Research reportedly highlights greater risks associated with alcohol consumption and calls for establishing both a new tax and a minimum price per unit of alcohol to limit consumption, particularly by young consumers. Their research suggests that one in four French people – and one in three French men aged 18 to 35 – were found to be “at risk” in terms of their alcohol consumption.
Canada: Quebec abandons plan to ban alcohol while hunting – As previously reported, Quebec’s law currently prohibits “hunting under the influence of an alcoholic drink” and its Minister of Forests, Wildlife and Parks had intended to insert new legislative text stating that no one may consume an alcohol beverage while hunting. On 1 June 2021, however, the Minister withdrew this modification during a clause-by-clause study of the legislation, thus avoiding debate over whether hunters could drink any alcohol beverages during hunting outings, which typically can last an entire week. Withdrawal of the amendment was reportedly supported by all political parties.
United States: Alaska Supreme Court allows underage drink drivers to face trial as adults – The Alaska Supreme Court has upheld the legality of a state law that allows young Alaskans to face trial as adults for misdemeanor drunken-driving crimes. The five-member court split 3-2 in favor of the law, with the two dissenting justices arguing that the current law requires more serious felony DUIs to stay in juvenile court, violating the equal-protection clauses of Alaska’s constitution. The majority argued that the law represents a tempered “policy of deterrence.”
Climate change causing the alcohol content of wines to grow – This article suggests that climate change is contributing to the rise in the alcohol levels of wines. As global warming heats up vineyards, grapes build up sugar more quickly which ferments into alcohol. Warmer regions such as Australia, California, and South America were already producing grapes with sufficient sugar. If winemakers there pick warm-climate grapes too soon, they may achieve ideal alcohol levels but could lose flavor maturity. The author concludes that the argument in favor of higher alcohol wines may be settled by the preference among the wine drinking consumers.
NOTE: We make no warranty of any kind regarding the accuracy or completeness of the information in these FIVS Alerts; nor do we necessarily support or agree with views expressed or contained therein.